How To Create Secure Future Retirement Income - Part D

In last blogpost, we discussed how does DIA work, now we will discuss how to determine if DIA is right for you.

Does DIA Make Sense For You?
These DIA products tend to be most beneficial for pre-retirees between the ages of 55 and 65 who are planning to retire in 5 to 10 years.  In addition to reducing market and longevity risk—an advantage of all fixed annuities—DIAs have the following advantages over immediate annuities:

• Potentially higher income.  Because DIAs have a deferral period, the underlying investments have a longer duration and higher potential return (and higher risk) than annuities that start income payments immediately.
• Chance to vary your interest rate exposure.  Because you can add to your DIA before taking payments, you have the ability to adjust your interest rate exposure over time.  If rates rise and you add new money, that could boost your guaranteed income stream at retirement.
• A reason to stay the course.  Locking in some guaranteed income through a DIA now may give you the confidence to maintain your target asset mix through market ups and downs, allowing you to establish, and maintain, an asset allocation more consistent with your investment time horizon, risk tolerance, and financial situation.
• A means of reducing risk.  Pre-retirees tend to shift to more conservative investments as retirement draws closer.  Establishing guaranteed income well before retirement with a DIA puts that risk-reduction process in motion automatically.  You might also avoid the need to sell equities at the wrong time—in a down market—to pay your expenses, because you've already put a DIA income resource into place.

If you are interested in DIA or other annuity products, please contact us.